When we first wrote about Storefront in March, the innovative concept for repurposing vacant retail space as pop-up shops was limited to San Francisco. Today, the company is announcing its expansion to New York City, with other major metros to follow before year’s end. The company has also raised $1.6 million in Seed financing from Mohr Davidow Ventures, Great Oaks VC, 500 Startups, David Tisch’s BoxGroup, and Sand Hill Angels. Storefront is a Fall 2012 graduate of San Francisco’s Angelpad accelerator.

They say necessity is the mother of all invention. Well the commercial real estate market is still struggling, as evidenced by national average of 10% vacancy rates and needs solutions like storefronts to deal with excess inventory and the flexible occupancy demands of many of today’s tenants. Storefront has partnered with large and small property owners, property managers, and brokers in each of its markets to pre-negotiate terms and availability of retail space for rent by members of its marketplace. These partners include Westfield, Simon, GGP, Colliers International, Cushman & Wakefield, Jones Lang LaSalle, and CBRE.

“It’s incredibly easy to start an online store today, but opening an offline store is still very difficult,” says Storefront co-founder and CEO Erik Eliason. “If you make something easier, more people will do it. Just as Etsy has empowered hundreds of thousands of sellers to open an ecommerce store, Storefront is doing the same for offline.”

The typical Storefront customer is an ecommerce merchant, an independent designer, an Etsy or Ebay seller, or another business that needs short-term brick-and-mortar space, often around a holiday or an event. The company has completed more than 100 pop-up leases to date in SF for over 3 million square feet of space, with the average duration being three to four weeks.

Online and offline retail are converging,” says Great Oaks Venture Capital Managing Partner Ben Lin. “Many ecommerce companies, including some in our portfolio [Bonobos, ModCloth, and StubHub among them] have opened brick and mortar stores and see it as a key channel for growth."

Storefront is a unique concept in the US, but it was first pioneered in the UK by a company called We Are Popup, which local residents claim has been quite successful. The idea should translate well across the pond. Storefront has yet to monetize, although it’s technically still in beta. Eventually, service fees will likely be added to both the listing and renting sides of each transaction, according to its CEO. (The company cannot take real estate commissions without first becoming a licensed brokerage, which it has no plans to do.)

It’s still early and there are potential regulatory and competition questions yet to be answered. Most municipalities will welcome increased occupancy and the tax revenue that it generates, but not all will be so progressive in how they obtain it. At the same time, although Storefront has partnered with many brokers, property managers, and property owners, there's a good chance that some in the industry will view the startup as competition and look for ways to combat the upstart company.

As I wrote at the time of the company’s launch, "Retail is changing, and the model of 50,000 square foot spaces and 20 year leases is likely dead." Storefront is bringing much needed innovation and imagination to an industry that has seen little of either over the last hundred plus years.